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SPEECH/07/431












Neelie Kroes

European Commissioner for Competition Policy




Introductory remarks at press conference on Ryanair/Aer Lingus decision






















Press conference
Brussels, 27th June 2007

In order to safeguard consumers, the European Commission has decided to prohibit the proposed takeover by Ryanair – which is one of the largest airlines in the world – of its main competitor in Ireland, Aer Lingus.

The Commission does not prohibit takeovers lightly – indeed this is only the second time since I became Competition Commissioner in November 2004.

But in this case, the Commission had no alternative because this takeover would have led to dramatically reduced choice for consumers and, as a result, the likelihood of lower quality and higher fares.

This would have been unacceptable for the fourteen million passengers currently flying on 35 routes to and from Ireland. As an island, Ireland depends heavily on air transport: the harm of this takeover to consumers would therefore have been significant.

This is the first time that the Commission has dealt with a proposed merger of two airlines with significant operations based at the same airport. This led to an unprecedented number of routes where competition would have been harmed, affecting a significantly higher number of European passengers than in any other case in the past.

Today, Ryanair and Aer Lingus compete vigorously.

If the merger had been allowed, this competition would have been lost. The merged company would have had a monopoly or a dominant position on 35 routes to and from Ireland. It would have accounted for around 80% of all intra-European traffic at Dublin airport. There would be very few other competitors, and none at all on 22 routes.

If the merger had been allowed, there would have been few new entrant airlines, if any, willing and able to enter the market and to challenge the combined forces of Ryanair and Aer Lingus in their home market.

Despite strenuous efforts to find remedies to these problems, no solution was found. Ryanair offered several remedies which I considered very carefully. Unfortunately, they were not sufficient to remove the negative effects of the merger for consumers. They were in particular not capable of ensuring that other airlines would enter the market on a sufficient scale to compete effectively with the merged airline.

A prohibition decision was unfortunately the only option.

Ryanair has built a successful business thanks to the EU's liberalisation of air transport. Ryanair has provided consumers with more competition and more choice. But Ryanair cannot now take away that choice. Any monopoly, even if advertised as low-cost or low-fares, is bad for consumers. The reality is that prices are higher and quality is lower when there is no competition.

Given the extensive investigation we have undertaken and the clear evidence of consumer harm we have found, I am confident that today's decision is legally sound and will bear the scrutiny of the Court of First Instance, should it be appealed.

This decision ensures that passengers flying to or from Ireland will continue to benefit from the competition that exists between Ryanair and Aer Lingus. They will continue to benefit from low fares and quality services.

Airline consolidation has to be achieved in a way that benefits consumers: it cannot be achieved at their expense.


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